Dassault Q2 Earnings Call

PTC likes poking fun at Dassault Systeme's triple-headed PLM
software, but ceo Bernard Charles got his chance to verbally
strut over his company's ENOVIA revenues: up 32%. (ENOVIA is the
name of Dassault's PLM division, whose three products are
SmartTeam, MatrixOne, and Enovia.)

"If you remember, when we acquired MatrixOne a year ago,
there were some questions and doubts about how complementary the
product family is. We see today that the portfolio is extremely
competitive on three fronts." He took credit for PTC's lower
sales, which he stated was due to MatrixOne wins over Windchill.

A second dig: "I am confident that Airbus will standardize on
everything we have" -- meaning the elimination of Pro/E from
Airbus.

A third dig against PTC came during the Q&A session: "We're
not far from doing twice the revenue of one of our competitors
that was supposed to be the biggest competitor a few years ago
-- twice the revenue." No mention of Autodesk having overtaken
Dassault in revenues.

Mr Charles noted a significant trend among companies in the
automotive industry. They are consolidating all aspects of
design under a single software brand. "All new car programs at
Mercedes Benz are now 100% CATIA of everything -- electric,
power train, chassis, engine, body, interior, everything." If
true, this could create a problem for CAD vendors who are unable
to offer "everything" to an auto company. On the other hand, I
wonder whether a car company give up on exquisite software, such
as Alias, just because it was not offered by Dassault or UGS.

He didn't think that the acquisition of UGS by Siemens would
have a negative impact on DELMIA, their factory simulation
software.

For end-users, he seemed to imply that a single user
interface would be applied to all of Dassault's software. It may
have been he was referring specifically to PLM; it was not clear
to me.

Dassault Systemes was very pleased at its year-to-date
revenue growth of 17%. Mr Charles did admit, however, that the
CATIA division's -8% slide "might be a little bit disturbing."

SolidWorks seats were up 6%, but the average selling price
fell 4%. "It's a little bit below what we expect for
SolidWorks." He blamed part of it on change in distribution in
Japan, and thought that lower-cost versions of SolidWorks were
selling better. An analyst taking part in the conference call
guessed that SolidWorks' growth would have been 30%, excluding
Japan. Mr Charles denied another analyst's suggestion that Jeff
Ray took over as CEO because of the Japan problem.

Inventor? Never heard of it: "We continue to put a lot of
attention taking AutoCAD design data and migrating it extremely
easily to a [SolidWorks] 3D environment. We believe that there
is a huge installed base there looking for 3D adoption."

The Future of Dassault Systemes

And then there is the issue of 3DVIA. First, the promise of
the technology: "You have heard about Second Life; we want to do
'First Life.' We do real things."

3DVIA is the future of Dassault: "This is where Dassault
Systemes is going -- online applications that connect to PLM.
The only thing [people] have are just little drawings and
sketches. They cannot see the product; they cannot see the
packaging. That's the fundamental goal of 3DVIA."

But there is problem. To visit
www.3DVIA.com, Mr Charles admitted, "you need to have a good
configured PC. Don't go with a small graphics card. I know we
are still sensitive to the PC configuration, so sometimes it
does not work." In practice, it is more than just the graphics
board; 3DVIA also limits which Web browsers work with it. And
then there may be customer confusion over the proliferation of
names attached to interactive 3D. What is the difference between
3DLive, 3DVIA, and 3DSWYM?

An analyst asked if Dassault was worried about Google being a
disrupter in 3D worlds. "No, I think it's a great opportunity to
expand," responded Dassault. "We will be able to do design
online. I'm not saying SolidWorks online, but for sure better
than Google [SketchUp]."

I suspect the problem will not be Google; instead it is that
Dassault has too closely linked itself with Microsoft. "We
believe that we can take advantage of the MSN community."

Fiscal Year Estimate

For the year, Dassault expects to make e1.3 billion (US$1.72
billion), growth 14% - 15%. And it expects to have double-digit
growth for the foreseeable future.